Alabamians are dubious of taxes. We have been since we emerged from the primordial soup. Nor do we care for the governments that levy them, whether state or federal. It has seemingly always been this way.
In 1901, despite the fears of sitting Governor William D. Jelks that such a move would bankrupt the state government, taxes were slashed to historically low levels by Alabama’s new constitution. Whereas the property tax rate had been set at 7.5 mills (0.75 percent) in 1875, the new state Constitution of 1901 lowered the rate to 6.5 mills (0.65 percent).
This, my fellow Alabamians, is where we find ourselves today. The property tax limitation, a vestige of post-Reconstruction politics, still sits at 6.5 mills. Property taxes, mind you, constitute a large chunk of the funding for local schools, services and infrastructure. If state officials believed in 1901 that Alabama’s tax structure was inadequate, how well might we expect such a system to work in 2012?
Not well, it turns out. Because of what little tax revenue Alabama generates is closely tied to sales and income tax, Governor Jelks feared that even if the state could operate on such a skeletal budget, a downturn in the economy might bankrupt the government.
Enter 2012. Alabama is not immune to the nationwide recession, and our state government is feeling the pinch. Money is tight, and our legislators are responding by doing everything in their power to balance the budget without raising a dime of new taxes.
Just last week, State Rep. Richard Laird, D-Roanoke, proposed a bill that would have raised Alabama’s dangerously low property tax millage rate from the 6.5 laid out in 1901 to 7 mills. According to a Birmingham News write-up, this half-mill increase would have instantly generated more than 28 million dollars in revenue and seemed to have enough backing to pass the house chamber, but support waned once lobbying efforts began.
Let me be clear: There is nothing wrong with running an efficient, or even a lean government. In fact, this is preferable. Our problem is that we are insisting on a wildly unbalanced approach to solving our financial problems.
While eschewing modest increases in taxation, draconian cuts have been made to the state budget. They have taken the form of teacher layoffs, pension cuts and the latest slashing of the mental health budget, which will negatively affect Tuscaloosa. It is quite evident that Alabama’s current tax structure is failing to meet the state’s needs.
Our general conservatism doesn’t have to be a block to progress. Even if raising taxes across the board is not a viable political option, Alabama can and should consider restructuring its taxes. Rather than frame the problem in the terms of a left/right paradigm, we should adopt a paradigm of pragmatism that will attract members of both parties. This goal may sound lofty, but there are a few practical measures that can be taken to start.
First, Alabama is one of the poorest states in the nation, yet we obscenely tax families making as little as $4,600 per year. At the same time, we give income tax breaks to our wealthiest citizens through deductions for federal income taxes paid. We should raise the minimum tax threshold to grant relief to poorest citizens and offset those financial losses by ending loopholes and exemptions for the wealthiest citizens.
Additionally, Alabama has the lowest property taxes in the nation. It is time to consider modest raises in property tax rates. While often seen as a strong inducement for business looking to settle in Alabama, these criminally low rates stunt the growth of public schools, infrastructure and government services. As these institutions suffer, quality of life declines. If we cannot maintain a decent standard of living for the majority of our citizens, more businesses will choose not to locate in Alabama, despite the tax incentives. For those still not convinced, modest increases in property taxes could be packaged with the removal of state sales tax from food and over-the-counter medication. We are one of only two states left that still levy taxes on these items, a tax that falls hardest on the poor. This move could be pitched to Republicans as a tax-break, and Democrats as relief for the impoverished.
These are just a few measures that might be considered, but one thing is certain: we as Alabamians need to grow-up when it comes to taxes. It is time we learned to stomach them as a necessary part of responsible government. To those who refuse to accept new taxes, I ask this: shouldn’t the taxes we already levy be collected in a way that makes sense? Without raising the overall rate of taxation on the average Alabamian, we could restructure our tax system in a way that would allow it to better meet the state’s needs. In my opinion, it’s time we do so.
Evan Ward is a senior majoring in history. His column runs weekly on Wednesdays.